If the Expected Rate of Return on AZNG Is 12

question 74

Multiple Choice

If the expected rate of return on AZNG is 12.72, its beta is 1.09 and the market risk premium is 8%, what is the risk-free rate?

• A) 4.72%
• B) 5.42%
• C) 8.72%
• D) 4.0%

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Definitions:

Security Interest

A legal claim or lien on collateral that has been pledged, usually to obtain a loan, that gives the lender a right to repossession if the loan is not repaid as agreed.

Insurable Interest

The requirement that a person stands to suffer a financial loss or certain other kinds of losses if the insured event occurs.

Retains

implies holding onto or keeping in possession, often used in legal and financial contexts to describe holding onto services, rights, or properties.

Shipment Contract

An agreement between a seller and buyer where the seller is obligated to ship the goods and the buyer is obligated to accept and pay for them, under specified terms.